The fine imposed by the Metropolitan Waterworks and Sewerage System (MWSS) comprises P534.05 million for failure to meet service requirements and P600 million to be used for the development of new water supply sources.

MANILA, Philippines — The government has slapped a P1.14-billion fine on Manila Water Co. Inc. over the supply mess in the Ayala-led utility firm’s service area.

The fine imposed by the Metropolitan Waterworks and Sewerage System (MWSS) comprises P534.05 million for failure to meet service requirements and P600 million to be used for the development of new water supply sources.

MWSS said the imposition of the penalty was provided under Section 10.4 of the concession agreement it signed with Manila Water.

“The penalties are on top of Manila Water’s self-imposed penalty amounting to P500 million that provided financial relief to its customers affected by the water shortage,” MWSS administrator Reynaldo Velasco said.

Manila Water implemented its voluntary one-time bill waiver program for consumers last April 1.

Under the program, all consumers of the east zone will receive a waiver equivalent to the first 10 cubic meters of their March consumption while severely affected consumers will not be charged at all.

“The water crisis that proved costly to Manila Water highlighted the lack of strategic preparedness notably on the realistic allocation of water supply to Manila Water, the development of new water supply sources and the much needed improvement of the Angat-Ipo-La Mesa tunnel and conveyance system,” Velasco said.

Manila Water, for its part, said it would abide by the order and pay the financial penalty as it holds itself accountable for the water crisis.

“While we are not the root cause of the inadequacy of the raw water supply coming from Angat Dam, which we are mandated to treat and distribute, Manila Water, as agent and contractor of water services of MWSS, hold ourselves accountable for our inability to provide our consumers with the usual uninterrupted water service,” Manila Water president and CEO Ferdinand dela Cruz said.

As part of its official report to President Duterte on the water crisis, MWSS zeroed in on the root cause of the supply problem that led to the water shortage last March.

As early as March 2012, Manila Water had already proposed to then administrator Gerardo Esquivel a water system facility that would have a raw water supply of 2,222 million liters per day to address the 1,705 MLD demand plus a buffer of 23 percent for peak demand.

However, Esquivel rejected the proposal and instead approved a water system facility that would have a raw water supply of 1,636 MLD for a demand of 1,408 MLD with zero buffer for peak demand.

The previous MWSS head during the Aquino administration insisted that the non-inclusion of a buffer on water demand would be a “more tariff sensible decision” considering its expectation of a new water source within five to six years.

There were also proposals from Manila Water for two projects that would add extra raw water supply of around 275 MLD, the 100 MLD Rizal province water supply improvement project and the Tayabasan river water supply project.

The past MWSS administrator, however, rejected all these proposals in 2013.

Manila Water argued that its allocated water supply from the Angat dam was no longer sufficient to cover the total demand of east zone consumers.

Raw water allocation has remained unchanged at 1,600 MLD since the concession started in 1997 when the east zone had a population of only three million people.

Today, Manila Water serves a population of almost seven million people whose per capita consumption has significantly increased over the last two decades.

“We cannot source any more from our system losses which have already been brought down to 12 percent from a high of 63 percent when we inherited the east zone concession of Metro Manila in 1997,” Dela Cruz said.

“Manila Water has strongly advocated for many years for the development of new water sources beyond Angat Dam, both to ensure sufficiency of water supply as well as resiliency in case of any calamity around the Angat Dam system. However, the development of new water sources is ultimately the responsibility of MWSS,” he added.

Meanwhile, as of April 23, Manila Water’s eight-hour water availability at ground floor level had reached 99 percent.

It has also narrowed the gap of supply deficit which has been reduced to 57 MLD from a high of 150 MLD.

The company continues to address the remaining deficit with the start of the first phase of its Cardona treatment plant, additional deep wells, as well as the cross-border flow with Maynilad.